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Eight months after the Deepwater Horizon disaster chased Tony Hayward from the chief executive’s post at oil giant BP PLC, a new investment vehicle he co-founded raised £1.35 billion ($2.18 billion) through a London stock-market listing—a third more than expected.
Vallares PLC is a shell company that will use that capital to buy an emerging-market oil and gas firm or asset worth between £3 billion and £8 billion. The company was founded by Mr. Hayward along with financiers Nathaniel Rothschild and Tom Daniel and former Goldman Sachs Group Inc. banker Julian Metherell.
The success of the initial public offering marks a fresh start for Mr. Hayward, who was labeled the “most hated man in America” during last year’s Gulf of Mexico oil disaster. He had generally been viewed as a successful boss at BP, improving profitability after years of poor financial performance, stripping out billions of dollars of costs and simplifying the company’s notoriously inefficient structure. He also broadened BP’s global portfolio, negotiating access to Libya, Jordan and Iraq and buying oil fields in Brazil.
But after three years in the job, the Deepwater Horizon drilling rig exploded in the Gulf, killing 11 workers and triggering the worst offshore oil spill in U.S. history.
The disaster completely overshadowed Mr. Hayward’s reforms at BP. He became the public face of the U.K. oil giant’s response to the disaster, but sparked fury with a string of gaffes, such as telling one interviewer he wanted his “life back,” and was subject to an intense grilling by the U.S. Congress
In an interview Friday, Mr. Hayward said the success of the Vallares share sale showed investors’ faith in his track record in the oil and gas industry.
“I think we’ve all been very encouraged by the support we’ve received,” he said. “People look at the team that’s been assembled and [see] a very strong board, … and a very good operational team with complementary skills.” he said.
Mr. Hayward’s co-founders at Vallares insisted U.S. investors weren’t deterred by Mr. Hayward’s negative image in some quarters. There was “no pushback at all” against his involvement in the business, Mr. Rothschild said on a conference call with reporters. “On both sides of the Atlantic, Tony was regarded as a very popular and extremely high-quality leader of BP,” Mr. Rothschild added. Half the money raised in the IPO came from U.S. funds, Mr. Metherell said.
Mr. Hayward said that after leaving BP, he had considered a career in private equity, but decided the model was inappropriate for long-term oil and gas investments. He also balked at the idea of taking the helm at an established oil company, choosing instead to throw in his lot with Mr. Rothschild, an old friend, and his new oil venture.
“After a long time in the conventional corporate world, the opportunity to do something entrepreneurial is very appealing,” he said.
When Vallares makes an acquisition, Mr. Hayward will likely head the acquired company. The founders are set to receive 6.67% of Vallares’ share capital on completion of the first transaction.
Vallares is modeled on another Rothschild vehicle, Vallar PLC, which raised £707.2 million in an IPO last year. In November it invested $3 billion in Indonesian coal assets. Its shares are up 18% from the IPO price.
In its stock-market listing, Vallares sold 133 million shares at £10 a share, raising a total of £1.35 billion, including £100 million put up by the founders. That was substantially more than the £1 billion they initially targeted. The company said buyers included Middle Eastern sovereign-wealth funds, institutions in the U.K. and east coast of the U.S. as well as big hedge funds. The shares fell 1% to close Friday at 990 pence on the London Stock Exchange.
Mr. Hayward said Vallares should fill a gap in a London market dominated by huge vertically-integrated supermajors like BP and Royal Dutch Shell PLC, and much smaller minnows. “There’s nothing in the £5-£10 billion market-cap space,” he said.
(c) 2011 Dow Jones & Company, Inc.
Photo © BP p.l.c.
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